As a business owner, credit may be a tool that can help your business grow to new heights, but it can also be a difficult concept to master. Making things even more challenging, your business may not be able to stand on its own when it comes to applying for credit. In many cases, your personal credit may hinder or improve your business’s credit approval. Here are some instances when your business credit may be impacted by your personal credit score.
If your business operates as a sole proprietorship, meaning you have not registered your business as its own legal entity with your state, your personal credit is your business credit. In this case, your business operates under your name with your social security number, so lenders don’t look at your business finances separate from your personal finances, even if you track them separately (which you should do anyway for accounting reasons).
In this case, while you can apply for business credit cards or business loans, they will all be under your name and you are personally liable for paying the debts back.
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